Richard & Jennifer are 63 and 57, with a modest amount of superannuation of $85,000 each.

Richard is self employed – $75,000 p.a

Jennifer works as an administrateive assistant – $84,000 p.a

They have a house worth $800,000+ BUT a mortgage of $520,000 that effectively covers the business loan as well (50%). Richard is self employed, but doesn’t think that the small business will sell for very much after 25 years of building it up….if he could sell it.

He also has a significant life insurance policy he has kept going to cover the mortgage so Jennifer will not lose the house if he dies; but it’s costing a significant amount each year.

Richard has been trying to reduce the mortgage while raising his now adult children the last of whom is 28 and still at home. They would ultimately like to downsize and move up the coast, putting the surplus into Superannuation.

I have recommended a new insurance policy that is much lower cost, but will only guarantee the cover until Richard is 70. This is not a problem; both Richard and Jennifer can set a 4 year plan target to move.The spare funds that were going to the insurance policy can now go to super, both Richard’s super can be accessed and with tax free funds supplement the house payments.

Both can direct extra payments to super and Jennifer can split her super to Richard s that it is tax free to him. Despite the government’s new $25,000 cap on contributions they can still make a meaningful build up of super over 4 years and downsize late in year 4 or early year 5. If he does sell the business then I have suggested how this can be tax free to him.

We have also examined an option of buying a property that they like and renting it
out until they move, on the proviso that they do this within the 4 years and the new place does not cost more than $350,000. They will consider this depending on their budget situation in 12 months time, and the legislation capping maximum super contributions – but commence looking now to understand the property market in their preferred area that they wish to move to.

We have also recommended updated wills and powers of attorney, the last set are now 17 years old.

This example should not be construed as advice. Your personal situation may appear similar but may also have a number of key differences that would influence the personal advice appropriate in your circumstances.